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GST(GOODS & SERVICE TAX) :

GST is an Indirect Tax which has abolished many Indirect Taxes i.e Central excise, service Tax, custom duties and sale Tax, Entry Tax, Central Sale Tax etc in India. The act came into effect from 1st July 2017. Goods & Services Tax law in India is a comprehensive, multi-stage, based tax that is levied on every value addition.

In simple words, GST is an indirect tax should be charged on the supply of goods and services both. Goods & Service Tax law has replaced many indirect tax laws that previously existed in India. So GST is known as “One Nation, One Tax”.GST council also clarify that if businesses voluntarily adopt GST registration, then their turn over must be exceed Rs 20 lakhs,otherwise it will be optional for them. For North East state it has recommend Rs 10 lakhs only.

Advantages:

  • Various application sites i.e Excise, Service Tax, Sale Tax merged &One site created.

  • Removing cascading effect.

  • Small business can avail composition facility.

  • Limitation is higher in case of registration.

  • E-commerce sector has been focused.

Components of GST:

There are three types of tax process implemented under GST as follows.

  • State GST(SGST)–SGST means purchase or sale of goods/services within the same state or Intra state transaction. Under SGST, revenue collected by State Government.

  • Central GST (CGST) – CGST means purchase or sale of goods/services within the same state or Intra state transaction. Under CGST, revenue collected by Central Government.

  • Integrated GST(IGST) - IGST means purchase or sale of goods/services between two state or Interstate transaction. Under IGST, revenue collected by Central Government only.

    e.g. Goods purchase Rs 1,00,000 within the state Odisha, if GST charged 18%, then 9% or Rs. 9000 comes under SGST, similarly 9% or Rs.9000 comes under CGST. So revenue amount should be collected by State and Central Government both respectively.

    If same Goods purchase from Kolkatta to Odisha , IGST will be charged as fully 18% or Rs. 18000 , the same revenue collected by Central Government only.


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Important on GST :

Before GST regime, every purchaser including the final consumer paid tax on tax known as Cascading Effect of Taxes.

GST abolish all the cascading effect, as the tax is calculated only on the value add at each stage of transfer.

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